It happens every year, gas prices spike for various reasons. In February, a series of shutdowns and re-openings of our refineries occurs so that they may be cleaned and maintained. From May through September, we all travel more for vacations and summer holidays. The Middle East has been a volatile place since around 1923, when an Egyptian with serious mental problems formed the Muslim Brotherhood and decided that he didn’t want those bothersome Jews hanging around in the desert anymore. This particular cog in the commodities market has always been sensitive to the slightest sneeze of any of its constituencies. The increased demand from other emerging economies have served to apply an inflationary pressure. This latest spike however is a little different. In terms of real dollars, the relative price has been mostly stable. The value of what we are using to pay for it has actually decreased, and since we are slow to realize that, we are somewhat shocked to see our old friend inflation rear its ugly head at the pump.
Over the past 3 years, through Quantitative Easings I and II, our economy has inflated over 13%. I have had this argument over the years with my very learned friends who view economics through the prism of the monetarist theory. They will argue that unless and until the money supply has a velocity, (how quickly dollars are spent and respent,) then inflation will remain relatively low. For those of us from the Austrian School of thought however, rising prices are a symptom of inflation, while the volume of money is representative of its measure, and inflation measures that volume against a given volume of wealth. In other words, our relative wealth has been deteriorating in this country, while at the same time our printing presses at the Federal Reserve have been churning out an increasing supply of paper cash. While prices domestically have not responded as quickly, due to the velocity being slow, (a concession to the monetarists that velocity can have an effect upon the symptoms of inflation,) domestically anyhow, we have not seen the worst of it yet. The commodity known as oil however is a different story. Much of this is purchased or at least involves markets outside of our borders. Those markets do not care in the slightest about the velocity of our money, nor what our views as to the relative worth of the dollar may be. When we pay in dollars, they will demand more of them for a barrel of oil, while at the same time having not actually raised their prices at all, or at least no where near the increases that we are facing. It is going to get worse before it gets better too, as Ben Bernanke has already announced, with the President’s idiotic backing of course, a Quantitative Easing III.
We saw this of course at another time in our history. Stagflation was the result of these very same economic policies visited upon us by Richard Nixon and Jimmy Carter. When I was in High School, I can remember the subject of micro economics being taught by a history teacher, whom I learned over the years had absolutely no understanding of economics in the slightest, that inflation and unemployment were inversely related. One thing that the Carter Presidency should have taught us, was that this thinking was dangerously wrong. It would appear as though Barack Obama, Timothy Geitner, and Ben Bernanke missed that important lesson.
For the Gold Hawks out there, your views are just as dangerous for the exact opposite reason. Tying the currency to a hard commodity such as gold or silver would put a cap on the ability to create wealth and tie it to a finite substance’s availability. Should that commodity ever disappear from the market place, as it did in the late 1920′s, the result would be the same depression. Gold in fact made such a poor currency, that even when it was in use, people switched to paper certificates which were supposedly tied to gold and silver. I will concede though that we need the ability to audit the Fed, and to put that system under tight control. The volume of currency should be held consistent with the size of our economy, and be adjusted in conjunction with it, and not allowed to operate outside of those boundaries.
The President’s answer on gas prices however, that is another thing entirely. I’m just going to say it now. What a dope! I know that the office of the Presidency deserves respect, but that respect must be paid first and foremost by the person who holds that office. The, “we should never increase our domestic production because it will take x number of years to make a difference,” argument may be the single dumbest thing ever said by any human person on our planet. If only we had opened up ANWR during the Clinton Presidency, Drilling on the Coastal oil fields during the Bush Presidency, and the Bakken formation early on in the Obama Presidency, then we would be enjoying that production today. That any person with an IQ above their age would suggest that increasing our supply will have no effect upon prices at the pump is just embarrassing. My greatest fear is that future generations will look at us through the prism of history and think to themselves, how on Earth did we survive, as a species, the stupidity of this generation. There really is no kind or diplomatic way to describe the Obama Presidency any more. It has gotten that bad.
The real tragedy of Stagflation of course is that as employment remains disappointing, people will have actually less of the currency on hand to pay for the necessary goods and services which will have inflated prices attached. The news media is out there feverishly trying to tell all of America how rosy things are, now that the Obama Boom is in full swing. The trouble for them is this, people can feel in real terms that their living standards and life styles have been severely cramped. No matter how much the Press tells all how we have it better today than we did 6 years ago, just before the Democrats took over our House, we can all feel reality on a daily basis.
Cross Posted at Musings of a Mad Conservative.
Stagflation? Porn movies are more expensive than ever?
There’s also the fact that most states have laws mandating (insert Barney Frank joke here) that oil companies have to use as many as eight different formulations to refine oil into fuel during the year, to appease the radical enviro-nazis, which drives up the cost big time.
@ Bob in Breckenridge:
Combine that with the fact that these formulations vary by geographic locale of where the final product is sold, amongst 47 different zones, and you have a veritable torture process to anyone who endeavors to actually satisfy our energy needs in this country.
Flyovercountry wrote:
Egg-zactly.
@ Flyovercountry:
Anybody that believes that is an accident, that is i merely unintended consequences from well-meaning but wrongheaded decisions hasn’t been payin attention for the last three years. They are doing this deliberately, not to preserve the environment, but to squeeze the lower and middle classes. The elites, of course, don’t care what the price at the pump is or, for that matter, how much it costs to fuel their Gulfstream to fly to Aruba to discuss the eeeeevils of the oooooil industry…
@ Iron Fist:
I agree with you 100%, but this was an essay not only on the oil industry’s plight with the Zero, but also the effect of QE’s I, II, and now III which was predicted only by everyone watching coming to fruition. The current spike in gas prices that we pay at the pump are due mostly to the fact that our currency is less more today than it was previously when compared to the rest of the word, and the international markets.
I can see gasoline formulated on regions: Northeast, South, Midwest, and West. Perhaps a fifth blend based on altitude? Of course, none of this will come to pass so long as Обама remains.
I remember stagflation at the time as a young worker. I remember that Carter was impotent to do anything about it and that created despair, division, and mistrust among Americans:Not unlike today.
@ BatGuano:
But did jerks steal money boxes from girl scout cookie stands back then?
@ waldensianspirit:
It would have been unimaginable back then.
@ BatGuano:
We have a lower class of thug these days…
Specter says Obama ditched him after he provided 60th vote to pass health reform
Doh! You thought he’d have you over for tea?
Iron Fist wrote:
Thugs have always been thugs but what they do today is beyond anything I have heard of. Robbing Girl Scouts? Standing in front of polling places with night sticks and no repercussions…?
Thar is gold in them thar hills!
waldensianspirit wrote:
You’d have to have a heart of stone not to laugh at Specter. He trusted people like himself.
@ waldensianspirit:
If Arlen truly wants to know why the he faced the primary challenge from his fellow Republicans, all he needs do is to look in a mirror. He was an even bigger turncoat than Olympia Snow, and deserved the fate he received. His defection was merely the confirmation of a long career as voting in lockstep with every thing that the Republican Party claims to be against. As for Bob Dole validating his decision, just consider the source as being another of the squishy GOP Congress Critters who spent a life time operating without any discernible principles.
Watching Obama and Romney will be as painful as watching Hoosier Hoops and Hoosier Hoops-lite arm wrestle
@ waldensianspirit:
@ Flyovercountry:
He’s suing the NASDAQ for “discrimination against the Chinese” after they dropped a windmill mfgr.
It amazes me how addicted these people get to power.
Go golfing and shut up!!
bho is going to shut down coal mines, coal plants, saying going after natural gas is bad for the enviorment, not giving out leases for oil drilling, nixing the pipeline from Canada. So bascially he is making the United States more dependent on other countries for oil.
What do you think the price of oil will go if Iran goes completely nuclear? It will sky rocket!
@ Bumr50:
That buffoon hasn’t retired yet!
@ Lily:
Gingrich said that he got a call from Herman Cain,
explaining Obamas 9-9-9- Plan.
The plan is $9.99 for a gallon of gas.
Sounds about where they want to go.
@ Lily:
That only makes his so-called “green” energy look more attractive. win-win for imam obama
via ace a feel good
.. and the Democrat argument is always that we can’t drill our way out of this because even if they opened up ANWR [offshore, shale, Keystone XL, federal lands, etc], it would be 10 years before we started seeing oil from those sources. Guess what? It’s been 20 years since Clenis made that argument regarding ANWR, we’d now have 10 years worth of oil from there if it had opened up.
Regarding the counter-argument to solid currency made above. Not sure how requiring that a value-backed currency would limit the creation of wealth. If the currency supply is limited by the supply of silver and gold, value can be created by adding other commodities to which currency is tied. A commodity backed currency seems to have worked well enough that we were able to create value through the Industrial Revolution. Barter is another option in the case of limited currency. It is still trading value for value vs. value for fiat money. What we have right now is too subject to manipulation by weak politicians
@ Bumr50:
What an ass! What Specter knows about the capital markets could be printed in a leaflet sized publication. This is the last place this imbecile should be espousing his opinions. I hope the judge sticks Arlen with the bill for this bit of malfeasance.
A reminder that this election is so very important.
A Scary Obituary
In 1887 Alexander Tyler, a Scottish history professor at the University
of Edinburgh ,
had this to say about the fall of the Athenian Republic some 2,000 years
prior:
“A democracy is always temporary in nature; it simply cannot exist as a
permanent
form of government.
A democracy will continue to exist up until the time that voters discover
that they can
vote themselves generous gifts from the public treasury.
From that moment on, the majority always votes for the candidates who
promise the
most benefits from the public treasury, with the result that every
democracy will finally
collapse over loose fiscal policy, (which is) always followed by a
dictatorship.”
“The average age of the world’s greatest civilizations from the beginning
of history, has
been about 200 years.
During those 200 years, these nations always progressed through the
following sequence:
From bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back into bondage.”
The Obituary follows:
Born 1776, Died 2012
It doesn’t hurt to read this several times.
@ BatGuano:
He probably invested all of his money in Chinese windmills after Obama was elected on an “insider tip”, but now that green energy is going over like a lead balloon, he feels betrayed.
It must be the market’s fault. It couldn’t be his!!
//
@ RIX:
That is exactly where he wants it to go. Not to mention he will still be blaming Bush. Who will this effect the worse???? The older population and the poorer population. He has no concern for them. Not to mention this odd tidbit … what the hell Tide is being sold on the black market?
Police take on rising wave of Tide detergent theft
Read more: http://www.foxnews.com/us/2012/03/12/police-take-on-rising-wave-tide-detergent-theft/#ixzz1ovxsEZIN
Sounds like Woody Harrelson is having a real Dale Carnegie moment
@ AZfederalist:
History already provides the template for this argument. One of the causes of the Depression which began in 1929 was the disappearance of gold from the market place. Since the currency was gold backed, it resulted in a severe depletion of capital, which is necessary for building new factories, buildings, products, etc. That is the very definition of depression. The concept of currency is merely something to serve as a symbolic media for exchange of goods and services. Barter is not the best system, since the beans I produce may only be wanted by some and not all in a population. You may not want my beans, but the tailor who trades clothing to you for your buggy whips might. Currency is only a media which makes this possible without us searching for trade partners each and every time we wish to make a trade. Gold, has no real value in any context besides what people have assigned it already. It is the only commodity traded which is not used for any other purpose than to be collected, polished, and turned into coin or bullion.
@ waldensianspirit:
A REAL reporter would’ve asked for an example, although quite honestly some of the sh*t John McCain says makes ME weep for humanity.
@ AZfederalist:
Good point. And those valuable commodities, gold, silver, platinum, etc. are not fixed supply. More can be mined, and will be.
Nor are obliged endure a fixed price for those metals. Say we went back on the gold standard, at $1500 per ounce. We could have a mechanism in place to periodically meet and negotiate changes in that rate.
http://www.mediaite.com/tv/former-mccain-strategist-steve-schmidt-on-game-change-notion-of-palin-being-president-frightens-me/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+mediaite%2FClHj+%28Mediaite%29
Steve Schmidt says he wanted to lose to make sure Palin was never President.
Stick a fork in it. This defines the stupid party
@ Lily:
Aha! The true funding source of the Tides Foundation, revealed at last.
Soledad O’Brian opened her piehole… Lied out her ass, and the entire Breitbart/Conservative community is currently slamming her Twitter page. So of course I had to throw my two cents into the air…
CNN lies to it’s viewers and get’s caught.
A fun little 60 Minutes segment on why India has always been the world’s largest consumer of gold. (although China is gaining)
http://www.cbsnews.com/video/watch/?id=7398482n&tag=re1.galleries
@ Lily:
Most detergents are petroleum derived products.
Alberta Oil Peon wrote:
A bunch of people are saying that the US dollar pricing of gold as THE global price will have to change as prosperity moves from West to East. The US currency as the world reserve currency is no longer realistic due mostly to the massive debt load and the unrestrained printing of the currency.
Bumr50 wrote:
Bumr50 wrote:
Thing is,that’s the stuff that a lefty like the Woodhead agrees with. That guy is a blithering idiot, his Woody character on Cheers seem to have captured his true intellectual capabilities.
@ AZfederalist:
Yeah, that’s why I said they should’ve asked for an example.
I guarantee he couldn’t think past Rush calling Fluke a slut.
He has no idea what Republicans say or don’t say.
doriangrey wrote:
If you could measure narcissism like they measure IQ, I’m quite sure O’Brian would be high ranking on the first and not so much on the second. These so-called reporters are like roosters who think their crowing causes the sun to come up in the morning.
Nice article you wrote!
@ AZfederalist:
Aren’t we all tired of overpaid movie stars and their use of fame to tell the little people what to do? Cripes, it’s revolting.
yenta-fada wrote:
Soledad is getting her ass handed to her on a solid gold platter on her very own Twitter page, now that thar is just plain funny.
Bumr50 wrote:
Indeed could be why their prices are sky-rocketing!
Yep the economy is on the mend when Tide detergent is now on the black market!
Yep Good Times Are Here Again!!!
yenta-fada wrote:
Excatly what makes them experts at politics??? Just because they star in movies they should really keep thier opinions to themselves shows just how stupid they are.
Lily wrote:
Would be interesting to know if it’s the detergent with Phosphate removed or still present. Can’t get the Phos stuff here in OR and it works like shit (dishwasher too). Nice thing is you can buy TSP at Home Depot and add it back in. Lots of folks drive to Idaho where you can still get the stuff that works but I like my solution better.
/lurk
Hahaha, Charles getting the soft examination by Obdicnut.
If only our Dear Leader “hadn’t ever been wrong”, he’s permanently tarred.
@ Bagua’s Ghost:
Crosspost from DoD.
The Lizard thing just took a serious thrashing from his new kiss-up site, and main idea source, Media Matters!
@ CynicalConservative:
I tried using a teaspoon of TSP for the dishwasher machine, but it left the glasses hazy and such.
What went wrong.
@ Lily:
In the Health Care Reform bill, we are referred to as
“units.”
The Committee will decide who deserves the expenditure
of medical resources. Seniors & imperfect infants will
not fare well.
Heck, Obama supported flat out infanticide as a State
Senator, this is nothing for him.
Lily wrote:
Unfortunately, having these stars as leftists are like product endorsements. For example, they use sports heroes to advertise everything from deodorant to watches. The sales actually increase or coporations wouldn’t pay the stars big buck for the endorsements. So when the Leonard DiCaprios, etc. talk about green energy, their private jets don’t make it into the public perception. If I buy a (for example) Prius, it will make me cool like a movie star. Same with Ozero who desperately wants his ‘cool factor’ back. Fewer people think he’s cool when they can’t afford to fill their gas tank to go on vacation or see family and friends.
@ Bagua’s Ghost:
Dunno honestly, worked like a charm and crystal clear here. Maybe the brand or the water.
/lurk
Lily wrote:
If you start measuring your savings in ounces of Tide, it’s probably as valid as measuring them in dollars! It’s just tough getting the detergent into a safety deposit box./
New thread!
@ yenta-fada:
Takes the term “money laundering” to a whole new level!
@ yenta-fada:
Gets amazingly clumpy during storage underground or basement too
@ CynicalConservative:
Could be the hard water I suppose.
/haunt
Alberta Oil Peon wrote:
waldensianspirit wrote:
We use the liquid form. Wow, if it has liquidity, maybe Tide really is money./
yenta-fada wrote:
ROTFLMAO… And here you have been hording all of the silly gold, let’s see you wash anything with that…
@ doriangrey:
We tried to hoard booze and chocolate as a store of value. Didn’t work. lol
yenta-fada wrote:
ROTFLMAO… Yea, I can see how that might be a tough one…
i assume your 13% starts counting in the deflationary spikes of 2009…take that anomaly out and inflation has been low…roughly 3% over the reported period per year, which was right in line with the long term regression line from 90 to 07…roughly 3%-4% per year.
now. will there be coming inflation. oh yes, there will. as soon as velocity returns to each single dollar in the economy…then bar the door, because we will see real inflation. if there is no increase or near zero velocity then we might see deflation. dollars are not worth as much when they dont move no matter how many there are, that said 3-4% a year isn’t bad considering the amount of money printed in q1-3.
are we in real trouble…yep.